Чарльз Плоссер http://so-l.ru/tags/show/charlz_plosser Mon, 22 Jan 2018 13:20:48 +0300 <![CDATA[One ex-banker's built-in advantage in the Fed chair race: Family ties to Trump]]> With Gary Cohn’s chances of becoming chairman of the Federal Reserve diminished, another former banker is waiting in the wings for the coveted post: Kevin Warsh.

A veteran of both the central bank and Wall Street, Warsh is already high on the White House’s list of possible successors to Fed Chair Janet Yellen. But he has an enviable reference: his billionaire father-in-law, who met Donald Trump in college and is a confidant to this day.

Warsh is married to the granddaughter of cosmetics magnate Estée Lauder, putting businessman Ronald Lauder in his corner. Though the president has provided few clear signals on whom he will pick for the world’s most important economic job, that family tie is a durable association with Trump that no other contender can claim.

“Anytime someone has a connection to someone who’s powerful or famous, it matters immensely to Donald Trump,” Trump biographer Tim O’Brien said.

If Warsh is nominated, “I can’t imagine that would come to pass without Trump having some sort of a conversation with Lauder,” O'Brien said.

Warsh’s odds of taking over the Fed seemed to brighten after Cohn, the director of the National Economic Council, publicly criticized Trump’s response to violence in Charlottesville, Virginia. That angered the president, though Cohn, a former Goldman Sachs president, could re-emerge as time passes.

It is also possible that Yellen, a Democrat appointed by President Barack Obama, will be renominated. But her views on regulating banks diverge considerably from those of Trump, who once vowed to do “a big number” on post-financial crisis rules. And Senate Republicans have no love for her.

Meanwhile, Trump’s fondness for bankers could put other veterans of finance in play, such as former U.S. Bancorp CEO Richard Davis or onetime BB&T CEO John Allison. But Warsh’s family connections are the subject of persistent chatter in the Fed race.


Ronald Lauder, Estée Lauder's younger son, has known Trump for five decades, ever since they attended the Wharton School of the University of Pennsylvania. The two have since run in similar circles, both in New York and in Palm Beach, Florida, where they have homes. Trump even launched a cologne in 2004 called “Donald Trump, the Fragrance” in partnership with Estée Lauder.

Lauder, a former ambassador to Austria with a Forbes-estimated net worth of $3.5 billion, has spoken regularly with the president since Trump took office. According to a person familiar with the conversations, they mostly discuss Middle East issues; Lauder is president of the World Jewish Congress.

Warsh and Lauder declined to comment for this article.

In addition to convenient family links, Warsh has other qualities that Trump admires. Charming and well-connected, the 47-year-old former banker looks the part of a polished executive, an important consideration for the president.

“I do think at the end of the day he relies first and foremost on his own gut when he meets people,” O’Brien said of Trump.

And Warsh isn’t a formally trained economist, a group with whom Trump doesn’t normally associate. (Warsh has a law degree from Harvard.) He has already established a relationship with the White House, having been a member of Trump’s Strategic & Policy Forum before that panel was disbanded in the wake of the president’s comments about Charlottesville.

In his role as a visiting fellow at Stanford University’s Hoover Institution, Warsh wrote a paper with a group that included two other Fed chair hopefuls — Stanford economist John Taylor and Columbia University economist Glenn Hubbard — defending Trump’s goal of sustained 3 percent annual GDP growth.

But he is also a Washington insider and avowed free trader who has criticized the central bank’s loose monetary policy, facts that could work against him with the president.

Regardless of whom Trump taps to be the next chair, the president’s penchant for loyalty will cause nervousness among the Fed’s defenders, many of whom bristle at the steady criticism of the central bank from Congress.

“The Fed in my view has not stood up for itself in this regard well enough, and I would hate to see its independence deteriorate further,” said Charles Plosser, a former president of the Philadelphia Fed. “I don’t know what role a chair will play in that ... but I do suspect that being too political may not help.”

Warsh started his political career during President George W. Bush’s administration, after seven years at Morgan Stanley, where he was vice president and executive director in the investment bank’s mergers and acquisitions department. He was hired in 2002 as an economic policy adviser in Bush’s White House, two months before marrying Jane Lauder.

After four years, Bush tapped him for a slot on the Fed’s board, making him — at 35 — the youngest governor in the central bank’s history.

At the Fed, he was part of the inner circle of then-Chairman Ben Bernanke, who in his book “The Courage to Act” described Warsh as one of his most frequent companions in meetings and on conference calls during the financial crisis. He also worked as a go-between for CEOs and the Fed board.

“We worked very, very closely during the crisis, when he and I and Chairman Bernanke were kind of a triumvirate,” former Fed Vice Chairman Don Kohn said in an interview. “He really was an important liaison between the Federal Reserve Board and the financial markets, helping us understand and shape our response to the financial crisis.”

But later in his career at the Fed, Warsh began pushing back on Bernanke’s decision to continue massive purchases of Treasury bonds and bundled mortgages to push down long-term interest rates. In one instance, he voted with the chairman on a second round of asset purchases — and then wrote an op-ed the next week expressing reservations about the policy. A few months later, he resigned from the central bank.

Bernanke said in his book that he held no grudges against Warsh, adding that his former colleague had voiced reservations even before the vote.

“[D]espite hearing from a few [Fed] colleagues who were piqued at Warsh’s op-ed, I was comfortable with it,” Bernanke wrote. “I never questioned Kevin’s loyalty or sincerity. He had always participated candidly and constructively, as a team player, in our deliberations.”

When Timothy Geithner was tapped by President Barack Obama as Treasury secretary in late 2008, Warsh made an unsuccessful bid to replace him as head of the New York Fed. He lost out to Bill Dudley, a longtime veteran of the reserve bank who ran its markets desk during the crisis.

Warsh has continued to be a consistent critic of Fed policy. He has complained about too much uniformity of thought within the agency. And he regularly advocates reform, including more transparency and a clearer direction, but with a level of vagueness that makes him widely palatable among Republicans.

“The Fed should straighten itself from its defensive crouch,” Warsh said in a speech in May. “And it should resist the reflexive response that any proposed changes in governance are a threat to the institution’s independence.”

Multiple former Fed officials said that while they respect Warsh’s intelligence and the indispensable role he played during the financial crisis, he isn’t steeped in the details of monetary policy. They and other observers disagree about whether his lack of a Ph.D. in economics will be a significant problem.

Kohn argued that it shouldn't be a prerequisite to leading the central bank. Other former colleagues agreed.

“He’s pretty creative, and … he’s not tied to any models,” said Nellie Liang, a onetime Fed staffer who worked closely with Warsh. “That lets him ask questions in a different way or propose things in a different way that sometimes is useful.”


But others worried that having a Fed chair who knows less about monetary policy than other board members could undercut his authority. The last central bank chief without a Ph.D. in economics was Paul Volcker, though he had a master's degree in economics.

Warsh’s experience at Morgan Stanley, however, gives him practical experience in financial markets.

Jordan Haedtler of the progressive group Fed Up, which advocates lower interest rates and more diversity at the central bank, doesn’t see Warsh’s Wall Street ties as a positive.

“He was tasked by Bernanke with being the emissary to his former employer and other major Wall Street firms, so his independence from the financial sector is just as questionable as the Trump administration as a whole,” he said.

Haedtler also argued that Warsh was “spectacularly wrong during the lead-up to the crisis, during the crisis and following the crisis.” He cited a March 2007 speech in which Warsh praised the proliferation of new financial instruments, one of the major factors leading to the crisis.

Meanwhile, it’s unclear how Warsh will get around areas where he disagrees with Trump, such as trade.

In his very first meeting of the Fed’s top policymaking body in 2006, Warsh warned that “creeping protectionism may become stronger,” adding that “the Federal Reserve has a possible role in trying to moderate some of that discussion,” according to a transcript.

His views on monetary policy might also be inconsistent with those of Trump. Warsh was an early voice calling for tighter economic conditions following the crisis — in contrast to Yellen’s Fed, which has kept interest rates low and the central bank’s asset holdings large to stimulate growth.

Still, he is often credited with understanding the politics surrounding monetary policy decisions. And unlike some of his fellow candidates, he doesn’t believe in pegging interest rate policy to formulaic rules.

His regulatory views also seem in line with those ofother Trump appointees. In an April 2012 speech, he called for greater market discipline and simplification of post-crisis rules.

“The paradigm that leaves the overwhelming burden of prudential supervision on the judgments of regulators and supervisors alone is bound to disappoint,” he said.

Ben White and Josh Dawsey contributed to this report.


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http://so-l.ru/news/y/2017_09_20_one_ex_banker_s_built_in_advantage_in_th Wed, 20 Sep 2017 12:06:20 +0300
<![CDATA[CHARLES PLOSSER: Why The Fed Should Own Only Treasuries….]]> CHARLES PLOSSER: Why The Fed Should Own Only Treasuries.

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http://so-l.ru/news/y/2017_06_12_charles_plosser_why_the_fed_should_own Mon, 12 Jun 2017 19:50:26 +0300
<![CDATA[Почему манипулируют рынками золота и серебра?]]> Денежное стимулирование осуществляется с декабря 2008 года. В течение этих 54 месяцев Федеральный резерв создал несколько триллионов новых долларов, посредством которых монетизировал эквивалентную часть долга.

Одним из результатов этой политики является то, что большая часть реальных процентных ставок в США являются отрицательными. Другой результат состоит в том, что предложение долларов превышает мировой спрос на доллары.

Эти два результата приводят к тому, что политика печатания денег Федерального резерва для покупки государственных облигаций и ипотечных деривативов ставит под угрозу обменный курс доллара, и тем самым, роль доллара как мировой резервной валюты.

Функция мировой резервной валюты означает, что доллар может использоваться для оплаты любых расчётов за нефть и погашения дефицита торгового баланса. Доллар является платёжным средством для международных расчётов.

Это мощная поддержка для США и главный источник их могущества.

Поскольку доллар является резервной валютой, США могут покрывать свои расходы на импорт и оплачивать торговые сделки, просто создавая свои собственные бумажные деньги.

Если бы доллар не был резервной валютой, Вашингтон не смог бы финансировать свои войны и сохранять огромный торговый и бюджетный дефицит. Следовательно, защита обменной ценности доллара является главным интересом Вашингтона, если он желает оставаться сверхдержавой.

Угрожать доллару могут альтернативные деньги — валюты, которые не создаются в огромных количествах, то есть золото и серебро, а также биткоины, цифровая валюта.

Угроза, исходящая от биткоинов, была устранена 17 мая, когда Министерство внутренней безопасности арестовало счета в биткоинах. Предлогом послужило то, что система Биткоин не прошла регистрацию в соответствии с требованиями казначейства США в отношении борьбы с отмывкой денег.

Вашингтон сдерживает угрозы от других валют, побуждая другие крупные валюты к опережению доллара по скорости печатания. Япония повиновалась, и Европейский центральный банк, хотя и несколько сдерживаемый Германией, также вошёл в режим печати для оказания финансовой помощи частным банкам, которым угрожает «кризис государственных долгов».

Остаются золото и серебро. Огромный рост цен на золото и серебро в течение последнего десятилетия убедил Вашингтон в том, что существует множество еретиков, не доверяющих доллару, и нельзя допустить, чтобы их становилось всё больше.

Цена золота выросла с 272 долларов за унцию в декабре 2000 года до 1917,50 доллара на 23 августа 2011 года. Финансовые гангстеры, которые владеют и правят Америкой, запаниковали. Как же поддерживать обменный курс доллара по отношению к другим валютам при падающей стоимости доллара по отношению к исторически реальным деньгам? Если обменный курс доллара будет атакован, Федеральный резерв будет вынужден остановить печатный станок и утратит контроль над процентными ставками.

Тогда раздулись бы пузыри рынка облигаций и акций, и взрыв процентных выплат по госдолгу ещё сильнее обременил бы долгом Вашингтон, лишив его возможности финансирования войн, полицейского государства и помощи банкстерам.

Необходимо было что-то сделать, чтобы не допустить роста цен на золото и серебро.

Существуют два рынка драгоценных металлов. Один — бумажный рынок Comex в нью-Йорке, на котором торгуются бумажные заявки на золото. Другой — рынок физических драгоценных металлов, где личная собственность берётся из магазинов, торгующих металлическими монетами, у торговцев слитками и ювелирных магазинов.

Банкстеры устроили так, что цена физического металла устанавливается не на тех рынках, на которых люди реально владеют металлом. Цена устанавливается на бумажном рынке, где играют спекулянты.

Такое раздвоение рынка дало возможность Федрезерву защитить доллар, выпускаемый их печатным станком.

Посмотрите на этот (англ.) график на сайте ZeroHedge. Несмотря на начатую в 2011 году атаку на золото, спрос на физическое владение велик, но, поскольку цена устанавливается на нереальном, бумажном рынке, срежиссированные короткие продажи, как и в текущем квартале 2013 года, могут понизить цену. И это несмотря на то, что фактический спрос на золото и серебро не может быть удовлетворён.

Хотя коррумпированный западный финансовый пресс побуждает людей отказываться от металла, все стараются покупать больше, и премии по отношению к спотовым котировкам возросли.

Во всём мире имеется нехватка золота и серебра в отлитых формах, например, монет весом в одну унцию и слитков в десять унций, пользующихся спросом среди физических лиц.

Искусственное происхождение низких цен на золото и серебро явно подтверждается тем, что спрос на слитки на рынке физических драгоценных металлов возрос, хотя непокрытые короткие продажи на бумажном рынке по идее должны вызывать бегство от физического металла.

О чём говорят эти незаконные манипуляции Федрезерва? Эти действия говорят о том, что Федеральный резерв не видит выхода из политики печатания денег, поддерживающей дефицит федерального бюджета и неплатёжеспособные банки. Если доллар будет атакован, и Федеральному резерву придётся остановить печатание долларов, процентные ставки вырастут. Рынки облигаций и акций обрушатся. Доллар перестанет котироваться как резервная валюта. Вашингтон больше не сможет платить по своим долгам и утратит главенствующую роль. Мир высокомерного Вашингтона рухнет.

Остаётся наблюдать, сможет ли Вашингтон взять верх над мировым спросом на золото и серебро. Сможет ли доллар сохранить верховенство, если вывод рабочих мест за рубеж лишил США способности компенсировать импорт экспортом? Может ли доллар сохранять верховенство, если Федеральный резерв создаёт тысячу миллиардов новых долларов ежегодно, если БРИКС, Китай и Япония, Китай и Австралия и Китай и Россия заключают договоры для взаимных торговых расчётов без использования доллара?

Если основанная на потреблении американская экономика, лишённая потребительских доходов из-за переноса рабочих мест за границу, провалится ещё глубже в третьем и четвёртом кварталах – этот спад не могут замаскировать липовые статистические отчёты — дефицит федерального бюджета возрастёт. Каков будет эффект для доллара, если Федеральному резерву придётся увеличить денежное стимулирование?

Для Америки подготавливается «идеальный шторм». Реальные процентные ставки являются отрицательными, но деньги и долги плодятся без остановки. Падение доллара требует поиска пути выхода из этой ситуации усилиями всего мира. Федеральный резерв может печатать доллары, поддерживая этим высокие цены на рынке акций и облигаций, но он не может печатать иностранные валюты, удерживающие доллар на плаву.

Когда падёт доллар, падёт и мощь Вашингтона, вот чем объясняется мошенничество на рынке драгоценных металлов. Для сохранения мощи. Таков план. Станет ли он очередным бесчестным завоеванием Вашингтона?

Управляющий гонконгским хедж-фондом Уильям Кей откровенно высказался об исчезающих запасах золота, финансовой деградации и Федрезерве. Кей, 25 лет назад работавший для Goldman Sachs в сфере слияний и поглощений, является основателем Pacific Group. Он дал ряд письменных интервью, одно из которых перед вами.

Кей: «Цены акций, по нашему мнению, были взвинчены всем этим кокаином от Федрезерва и других центральных банков. Так что мы живём в финансовой потёмкинской деревне переоцененных акций. Не смогу назвать день, когда они обвалятся, но могу сказать со всей уверенностью, что это неизбежно. Казначейские облигации столь  сильно переоценены по той причине, что сам Фед представляет собой 70% рынка облигаций. Таким образом, цены акций и облигаций сильно завышены, и все печатают деньги. Только за последнюю неделю ЕЦБ снизил ставки и рассказал, что намерен снижать и дальше…

То есть сохраняется тенденция к дальнейшему снижению процентных ставок — чтобы печатать больше денег, а не меньше. Федрезерв уже на нуле, и он вбрасывает в систему по триллиону долларов в год при этой ставке, по 85 миллиардов долларов в месяц. Это расширение и без того гигантского баланса Федрезерва.

Они разыгрывают систему, представляя дело так, будто всё обсуждается. Когда выступает Чарльз Плоссер, это выглядит как театр Кабуки. И они используют этого подёнщика, Джона Хильзенрата, с которым я знаком, он был в моём офисе, для выступлений с целью вселить страх инвесторов  и отпугнуть честных людей от единственного убежища, которое есть в мире — драгоценных металлов. Настоящих осязаемых драгоценных металлов. Хильзенрат выступает со своей пьесой во время самых сильных манипуляций (ценой золота и серебра) и пытается вселить в людей опасение, что Фед на самом деле выйдет из игры. Но я говорю вам, что выхода из этого нет.

Выхода нет потому, что как только они выйдут из игры, или попытаются, система рухнет под собственным весом. Единственное, на чём держится весь этот фиктивный мир — это триллион долларов в год, что почти точно совпадает с размером бюджетного дефицита правительства США. Это означает, что всё может так и продолжаться, пока не случится коллапс. Вот как это финансируется. А теперь посмотрите, что происходило в истории при проведении подобной политики. Зачем людям деньги, которые беспредельно обесцениваются? И это делает не только Федрезерв. ЕЦБ делает то же самое, Банк Англии делает то же самое, но наиболее агрессивным преступником на сегодняшний день является Банк Японии.

Западня готова. Это наш реальный мир. Не обращайте внимания на Хильзенрата, он просто наёмник. Не обращайте внимания на банки, оперирующие драгоценными металлами, которые постоянно выпускают отчёты о медвежьем рынке и прогнозы понижения золота, чтобы всех отпугивать. Потому что это те люди, у которых нет золота.

ABN AMRO является одним из самых медвежьих банков в отношении золота. ABN AMRO уже объявил себя банкротом по золоту, прекратив выдачу золота клиентам. Другими словами, у них нет золота вовсе. Примерно месяц назад они сделали рассылку своим клиентам, которые являются владельцами золота и имеют соответствующие документы банка: «Просьба не обращаться к нам за выкупом золота по вашим документам».

То есть, у банка ABN AMRO золота нет. И если вы сверитесь с общедоступными данными, у JP Morgan почти нет золота. Их золотой запас находится на историческом минимуме для современной эпохи. Нью-Йоркская товарная биржа СОМЕХ согласно последнему отчёту, который я видел, имеет 200 тонн золота. Это также исторический минимум для современной эпохи, при огромном объёме обязательств по обмену бумаг на золото».

Угроза гегемонии доллара, вот причина фальсификации рынка физических металлов

Исчезающие запасы золота, финансовый крах и Федрезерв

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http://so-l.ru/news/y/2017_04_16_pochemu_manipuliruyut_rinkami_zolota_i_ser Sun, 16 Apr 2017 15:00:07 +0300
<![CDATA["There's A Real Problem Here" - Did Fed's Plosser Just Admit Trump Is Right About Yellen?]]> Former Philly Fed President Charles Plosser got a lot off his chest this morning during a Bloomberg TV interview. Decrying that central bankers "wring their hands all the time," Plosser noted that The Fed was very "concerned about credibility," and was "pretty good at conjuring up reasons not to act."

His mutinous discussion then concluded, sounding very Trumpian, by noting that The Fed "shouldn't be afraid a recession might come," exclaiming "there's a real problem here" with The Fed.

Additional headlines include:

  • *PLOSSER: FED'S `IN A VERY DIFFICULT POSITION'
  • *PLOSSER: `THERE'S A REAL PROBLEM HERE' WITH FED
  • *PLOSSER: FED IS VERY CONCERNED ABOUT CREDIBILITY
  • *PLOSSER: CENTRAL BANKERS `WRING THEIR HANDS ALL THE TIME'
  • *PLOSSER: THERE'S FED DISSENT BECAUSE THERE IS UNCERTAINTY
  • *PLOSSER: `DISSENT IS HELPFUL' FOR FED
  • *PLOSSER SAYS FED PRETTY GOOD AT CONJURING UP REASONS NOT TO ACT
  • *PLOSSER SAYS FED SHOULDN'T BE AFRAID RECESSION MIGHT COME
  • *PLOSSER: WISHES FED ‘WOULD GET ON WITH IT’ AND RAISE RATES
  • *PLOSSER: NOVEMBER FED MEETING ‘NOT A DEAD MEETING BY ANY MEANS’

It seems Yellen is losing control of the narrative as more and more insiders 'get outside'; and perhaps, after all the establishment shock, Trump is right about the political nature of The Fed.

]]>
http://so-l.ru/news/y/2016_09_28_there_s_a_real_problem_here_did_fed Wed, 28 Sep 2016 15:28:33 +0300
<![CDATA[5 to 4]]> Narayana Kocherlakota:

5 to 4: On Friday, the Policy Board of the Bank of Japan decided to lower its deposit rate into negative territory for the first time.  The vote was five to four.  In this post, I argue that US monetary policy would be stronger if the Federal Open Market Committee (FOMC) were willing to issue statements and take actions that were supported by such narrow margins.
As is well-known, the FOMC operates by consensus.  No decision has had more than three No votes in at least twenty-five years.  There has not been a No vote by a governor in ten years, and there has not been more than one No vote by a governor at a meeting in over twenty years.  (See this great article by Thornton and Wheelock for a deeper review.)  
This decision framework is not statutory.  Rather, it is a Committee norm.  The norm is buttressed by Fed watchers and the media, who often refer approvingly to the absence of dissents at a meeting.  (Even today, this FT article refers to the lack of dissents at the December 2015 meeting as being a sign of a successful liftoff.)
This tradition of consensus has three main deficiencies. 
First, consensus creates a strong status quo bias that reduces the sensitivity of monetary policy to incoming data.   The current Committee norms imply that it requires a super-majority of the FOMC to implement a change in direction.  Without that super-majority, the Committee tends to stick to its prior course.   This automatically makes monetary policy relatively insensitive to incoming information.  
Second, the tradition of consensus opens up the possibility that relatively small minorities of FOMC voters can have a disproportionate influence  on monetary policy decisions.   For example, the above history suggests that the FOMC is following a practice under which all decisions need near-unanimous support from the governors.  If so, it becomes theoretically possible for a bloc of one or two governors to exercise veto rights over changes in the direction of monetary policy.
Finally, and perhaps most troublingly, the desire/need for consensus tends to strip collective Committee statements of their clarity.   (See a recent Wall Street Journal op-ed by Charles Plosser for a similar concern.)  For example, here’s how the current FOMC statement describes the conditionality of the path for the fed funds rate: 
“In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.”
This length of this list of conditioning variables helps create consensus, but it also serves to reduce the public’s understanding of the overall FOMC strategy.  This uncertainty can be a drag on the effectiveness of policy. 
Bold policy moves often engender significant disagreement.   Policy-making bodies must have cultures that can allow those decisions to get made, despite that disagreement.   Clearly, the Policy Board of the BOJ has that kind of culture.   I worry that the FOMC, with its emphasis on consensus, does not. 
I’ll write more about the potential economic importance of the BOJ’s move in a later post.  For now, I’ll simply say that, given the challenges facing the global economy, I applaud Governor Kuroda’s willingness to lead the BOJ in this new direction.
]]>
http://so-l.ru/news/y/2016_01_30_5_to_4 Sat, 30 Jan 2016 18:39:12 +0300
<![CDATA[Things to Read for Your Evening Procrastination on December 30, 2015]]>

NewImage

Over at Equitable Growth--The Equitablog:



And Over Here:


Might Like to Be Aware of:


Worth Reading

]]>
http://so-l.ru/news/y/2015_12_31_things_to_read_for_your_evening_procrast Thu, 31 Dec 2015 03:33:13 +0300
<![CDATA[Без заголовка]]>

Must-Read: I would say that if monetary policy makers wish to place limits on what can be expected from monetary policy, they need to also be making loud and constructive arguments about what will do the stabilization policy job if monetary policy is not going to push the envelope. I don't think Plosser ever made loud and constructive arguments directing other policy makers to do a constructive job...

Mark Thoma: On Summers: My Views and the Fed’s Views on Secular Stagnation: "The Fed's job would have been, and will be a lot easier if fiscal policy makers would help...

...I disagree with Charles Plosser's view on monetary policy, but I have some sympathy for the view that many people have come to expect too much from monetary policy:

On the monetary policy side central banks have clearly pushed the envelope in an effort to stabilize and then promote real economic growth. The pressure to do so has come from inside and outside the central banks... raised expectations of what the central bank can do.... It is not clear that this is wise or prudent.  Many have come to fear that without substantial support from monetary policy our economies will slump into stagnation. This would seem to fly in the face of nearly two centuries of economic thinking...

If secular stagnation is real, the Fed cannot overcome it by itself. Fiscal policy will have to be part of the solution.... Monetary policy -- and fiscal policy too -- can have a permanent impact on the natural rate of output by helping the economy to recover faster. The faster the recovery, the less the natural rate is lowered. So I agree with Summers that monetary policy needs to take the possibility of secular stagnation into account, I just wish he'd put more emphasis on the essential role of fiscal policy -- something he has certainly done in the past, e.g.:

I believe that it is appropriate that we go back to an earlier tradition that has largely passed out of macroeconomics of thinking about fiscal policy as having a major role in economic stabilization...

http://economistsview.typepad.com/economistsview/2015/12/summers-my-views-and-the-feds-views-on-secular-stagnation.html

]]>
http://so-l.ru/news/y/2015_12_31_brad_delong_s_grasping_reality_with_both Thu, 31 Dec 2015 03:07:34 +0300
<![CDATA[Links for the Week Ending January 3, 2015]]>

Latest Must-Reads:

Latest Links:


MOAR Must-Reads:

MOAR Links:

]]>
http://so-l.ru/news/y/2015_12_30_links_for_the_week_ending_january_3_201 Wed, 30 Dec 2015 01:05:41 +0300
<![CDATA[Summers: My Views and the Fed’s Views on Secular Stagnation]]> Larry Summers:

My views and the Fed’s views on secular stagnation: It has been two years since I resurrected Alvin Hansen’s secular stagnation idea and suggested its relevance to current conditions in the industrial world. Unfortunately experience since that time has tended to confirm the secular stagnation hypothesis. Secular stagnation is a possibility. It is not an inevitability and it can be avoided with strong policy. Unfortunately, the Fed and other policy setters remain committed to traditional paradigms and so are acting in ways that make secular stagnation more likely. ... Indeed I would judge that there is at least a two-thirds chance that we will experience zero or negative rates again in the next five years. ...

I believe its decision to raise rates last week reflected four consequential misjudgments.
First, the Fed assigns a much greater chance that we will reach 2 percent core inflation than is suggested by most available data. ...
Second, the Fed seems to mistakenly regard 2 percent inflation as a ceiling not a target. ...
Third... It is suggested that by raising rates the Fed gives itself room to lower them. ... I would say the argument that the Fed should raise rates so as to have room to lower them is in the category with the argument that I should starve myself in order to have the pleasure of relieving my hunger pangs.
Fourth, the Fed is likely underestimating secular stagnation. It is ... overestimating the neutral rate. ...
Why is the Fed making these mistakes if indeed they are mistakes? It is not because its leaders are not thoughtful or open minded or concerned with growth and employment. Rather I suspect it is because of an excessive commitment to existing models and modes of thought. Usually it takes disaster to shatter orthodoxy. We can all hope that either my worries prove misplaced or the Fed shows itself to be less in the thrall of orthodoxy than it has been of late.

The Fed's job would have been, and will be a lot easier if fiscal policy makers would help. I disagree with Charles Plosser's view on monetary policy, but I have some sympathy for the view that many people have come to expect too much from monetary policy:

... On the monetary policy side central banks have clearly pushed the envelope in an effort to stabilize and then promote real economic growth.  The pressure to do so has come from inside and outside the central banks.  These actions have raised expectations of what the central bank can do.  For the last three or four decades, it has been widely accepted among academics and central bankers that monetary policy is primarily responsible for anchoring inflation and inflation expectations at some low level.  In the United States, where the Fed operates under the so-called dual mandate to promote both price stability and maximum employment, monetary policy has also attempted to stabilize economic growth and employment.  Yet it has also been widely accepted that monetary policy’s impact on real variables was limited and temporary, thus in the long-run changes in money were neutral for real variables.

The behavior of central banks during the crisis and subsequent recession has turned much of this conventional wisdom on its head.  It is not clear that this is wise or prudent.  Many have come to fear that without substantial support from monetary policy our economies will slump into stagnation. This would seem to fly in the face of nearly two centuries of economic thinking. ...

If secular stagnation is real, the Fed cannot overcome it by itself. Fiscal policy will have to be part of the solution. (I do think one statement above is wrong, and it gets at the heart of Summer's recent work reviving hysteresis and his statement above about commitment to orthodoxy. When Plosser says "monetary policy’s impact on real variables was limited and temporary, thus in the long-run changes in money were neutral for real variables," he is ignoring recent work by Summers, Blanchard, and Fatas showing that recessions can permanently  lower our productive capacity, and it is worse when the recession lasts longer. This means that monetary policy -- and fiscal policy too -- can have a permanent impact on the natural rate of output by helping the economy to recover faster. The faster the recovery, the less the natural rate is lowered. So I agree with Summers that monetary policy needs to take the possibility of secular stagnation into account, I just wish he'd put more emphasis on the essential role of fiscal policy -- something he has certainly done in the past, e.g., "I believe that it is appropriate that we go back to an earlier tradition that has largely passed out of macroeconomics of thinking about fiscal policy as having a major role in economic stabilization.")

]]>
http://so-l.ru/news/y/2015_12_22_summers_my_views_and_the_fed_s_views_on Tue, 22 Dec 2015 21:08:46 +0300
<![CDATA[Links for 12-22-15]]>
  • The Bank Underground Christmas Quiz - Bank Underground
  • Piketty's book and macro models - Vox EU
  • Economic statistics: The Bean Report - Vox EU
  • Quantum cognition? - Understanding Society
  • Economic opportunity, health, and risk taking - EurekAlert
  • Splitting Jobs From Benefits Has a Long Way to Go - Justin Fox
  • Of Homo Economicus and Superintelligence - Digitopoly
  • The true meaning of Christmas - Chris Blattman
  • Incentive pay and top executive gender gaps - Vox EU
  • Upward-sloping IS curves after Miles Kimball - Nick Rowe
  • How MTV's "16 and Pregnant" Reduced Teen Pregnancy - Tim Taylor
  • The arbitrary estimated natural rate of unemployment - Robert Waldmann
  • The Effect of FF Rate Hikes on Consumer Borrowing Costs - Liberty Street
  • Interview with Charles Plosser - Cecchetti & Schoenholtz
  • ]]>
    http://so-l.ru/news/y/2015_12_22_links_for_12_22_15 Tue, 22 Dec 2015 09:20:33 +0300
    <![CDATA[Без заголовка]]>

    Must-Read: Last summer it seemed to me a significant and serious failure of governance on the part of the Federal Reserve Board of Governors in Washington DC that they had approved the search committee's choice of its own chairman to replace Charles Plosser as President of the Federal Reserve Bank of Philadelphia.

    It is, I think, almost universally agreed that Charles Plosser was a significant failure as President of the Federal Reserve Bank of Philadelphia: undistinguished as an administrator of the Bank, and a disaster as a member of the Federal Reserve's Open Market Committee. From the transcripts of the FOMC we can see him in action: always wrong, never in doubt, intellectually uncurious, and completely unwilling either to even consider that those who disagreed with him had arguments on their side or to make even the smallest efforts to mark his own beliefs to market.

    Now Duncan Black informs us that it does indeed look as though the appointment of Patrick Harker as President of the Federal Reserve Bank of Philadelphia was a considerable mistake.

    Personnel is policy, people. One of the most elementary principles of successful bureaucracy tells us the frequency with which the chair of a search committee should be appointed to the job under consideration. It is easy to remember: it is never. Another of the most elementary principles of successful bureaucracy tells us the frequency with which the appointees to other positions of an unsuccessful previous incumbent should be appointed to the job under consideration. It is also easy to remember: never.

    Duncan Black: Area Fed Chief Does Not Understand Monetary Policy: "Oh Jeebus...

    ...Accordingly, I would like to see rates raised sooner rather than later. With an early start, we can better ensure that monetary accommodation is removed gradually and that inflation returns to the Fed’s 2 percent target smoothly. My fear is that the Federal Reserve risks losing its credibility and only adds uncertainty to the economic landscape the longer the Committee waits to begin normalizing policy.

    Raising rates is how we increase inflation now?

    ]]>
    http://so-l.ru/news/y/2015_12_05_bez_zagolovka_6 Sat, 05 Dec 2015 19:02:09 +0300
    <![CDATA[Progressive Activists Protest For A Cause You Should Hear More About, But Won't]]>

    More than a dozen community activists picketed the Federal Reserve Bank of Philadelphia this week, protesting what they say is the bank president’s refusal to meet with them to discuss how Fed monetary policy affects real people.


    The roughly 15 activists are members of ACTION United, an organization representing low-income people of color in Philadelphia. ACTION United is affiliated with the national Fed Up campaign, a coalition of progressive groups advocating Fed monetary policies that prioritize full employment and shared economic prosperity.


    Fed Up and ACTION United planned Tuesday's protest because they say that Philadelphia Fed President Patrick Harker reneged on a promise to meet, and allow group members to give him a tour of low-income neighborhoods where they are active. The activists point to a video in which Harker appears to commit to the meeting in a conversation with ACTION United organizer Kendra Brooks at the annual Jackson Hole symposium in August.


    When Brooks followed up, Theresa Singleton, the Philadelphia Fed’s vice president and community affairs officer, said in an email obtained by HuffPost that a meeting was not in the cards, because the bank is reluctant to work with “just one organization."


    Instead, Singleton invited Brooks to Tuesday’s community development briefing for low- and moderate-income community stakeholders. Singleton also said Fed staff would “design and organize” their own community tour.


    That response rankled Fed Up and ACTION United members. The Federal Reserve has a dozen regional banks, and the activists have met or have planned meetings with all of the regional Fed leaders except Philadelphia's since the campaign began in August 2014. They want a meeting -- and they want it to take place in an economically distressed community of color -- not in the Fed’s offices.


    So they decided to pressure the Philadelphia Fed with a protest, featuring Fed Up’s trademark “What recovery?” signs and green "Whose Recovery?" T-shirts.


    ACTION United also sent Brooks to the community development briefing, where she and several nonprofit executives and bankers who work with low- and moderate-income earners spoke with Harker and Singleton.



    Brooks said she was mostly pleased with what she heard from Harker and other Fed officials, who she said sounded genuinely committed to researching the conditions in communities the Fed serves and finding ways to improve “economic autonomy” in the Philadelphia region. 


    “The outcome of the meeting was much better than we anticipated, but going in, we did not know the information that we knew coming out.” Brooks said. “We hope he will continue to keep the doors open for organizations like ours and our coalition. And that we will continue to be a part of that conversation and not excluded.”


    But Brooks noted that the Fed officials did not discuss how monetary policy and the Fed’s adjustment of interest rates disproportionately affects low-income workers and communities of color.


    For the Fed Up campaign, the exclusion of monetary policy reaffirms that nothing short of a meeting between Harker and activists will suffice.


    “We appreciate and accept the invitation to discuss community development and research, but this is not a substitute for the promise President Harker made to Fed Up,” said Shawn Sebastian, a policy advocate and staff attorney for the Fed Up campaign. “President Harker promised to speak with working families in the black neighborhoods of Philadelphia about their experiences -- where unemployment is double white unemployment. Harker promised to discuss how his monetary policy decisions can build a true full employment economy that works for everyone.”


    Philadelphia Fed spokeswoman Marilyn Wimp, in an email to HuffPost, didn't address a question about whether Harker reneged on his promise to meet with protesters. She instead pointed to Tuesday's briefing as evidence of Harker's interest in reaching out to diverse parts of the community.  


    But the list of the Tuesday briefing’s attendees reveals that Brooks was the only stakeholder from a group with a position on Fed interest rates.


    Crafting monetary policy is a main responsibility of the Federal Reserve regional banks. Regional Fed presidents occupy five of the 12 seats on the Federal Open Market Committee, responsible for adjusting the Fed’s benchmark interest rates. Lately, they have accounted for half of the committee’s votes, because the Senate has failed to approve presidential nominees for two of the seven seats reserved for members of the Federal Reserve Board of Governors in Washington.


    The FOMC keeps its benchmark interest rates low when it is more concerned about full employment, and raises them to curb excessive inflation when the economy has grown enough to drive up prices.


    Fed Up wants the central bank to maintain current low interest rates for the near term, which will allow economic demand to continue to grow, benefitting workers with more jobs and higher wages. The campaign applauded the Fed’s decision to leave rates unchanged in September.


    But Fed Up leaders said they're worried about the Philadelphia Fed and the role its president may play in future monetary policy decisions. The Philadelphia region's previous Fed president, Charles Plosser, who left the post in March, was an outspoken inflation hawk.


    Harker, who will serve a one-year term on the FOMC in 2017, was a member of the Philadelphia Fed board’s search committee for a new president, recusing himself once he became a candidate.


    Harker’s views on monetary policy are not yet known. He is a former trustee of the Goldman Sachs Trust, which Sebastian and other Fed Up critics said they worry will make him more sympathetic to financial institutions' concerns about inflation.



    -- This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.











    ]]>
    http://so-l.ru/news/y/2015_10_08_progressive_activists_protest_for_a_caus Thu, 08 Oct 2015 14:30:15 +0300
    <![CDATA[Progressive Activists Protest For A Cause You Should Hear More About, But Won't]]>

    More than a dozen community activists picketed the Federal Reserve Bank of Philadelphia this week, protesting what they say is the bank president’s refusal to meet with them to discuss how Fed monetary policy affects real people.


    The roughly 15 activists are members of ACTION United, an organization representing low-income people of color in Philadelphia. ACTION United is affiliated with the national Fed Up campaign, a coalition of progressive groups advocating Fed monetary policies that prioritize full employment and shared economic prosperity.


    Fed Up and ACTION United planned Tuesday's protest because they say that Philadelphia Fed President Patrick Harker reneged on a promise to meet, and allow group members to give him a tour of low-income neighborhoods where they are active. The activists point to a video in which Harker appears to commit to the meeting in a conversation with ACTION United organizer Kendra Brooks at the annual Jackson Hole symposium in August.


    When Brooks followed up, Theresa Singleton, the Philadelphia Fed’s vice president and community affairs officer, said in an email obtained by HuffPost that a meeting was not in the cards, because the bank is reluctant to work with “just one organization."


    Instead, Singleton invited Brooks to Tuesday’s community development briefing for low- and moderate-income community stakeholders. Singleton also said Fed staff would “design and organize” their own community tour.


    That response rankled Fed Up and ACTION United members. The Federal Reserve has a dozen regional banks, and the activists have met or have planned meetings with all of the regional Fed leaders except Philadelphia's since the campaign began in August 2014. They want a meeting -- and they want it to take place in an economically distressed community of color -- not in the Fed’s offices.


    So they decided to pressure the Philadelphia Fed with a protest, featuring Fed Up’s trademark “What recovery?” signs and green "Whose Recovery?" T-shirts.


    ACTION United also sent Brooks to the community development briefing, where she and several nonprofit executives and bankers who work with low- and moderate-income earners spoke with Harker and Singleton.



    Brooks said she was mostly pleased with what she heard from Harker and other Fed officials, who she said sounded genuinely committed to researching the conditions in communities the Fed serves and finding ways to improve “economic autonomy” in the Philadelphia region. 


    “The outcome of the meeting was much better than we anticipated, but going in, we did not know the information that we knew coming out.” Brooks said. “We hope he will continue to keep the doors open for organizations like ours and our coalition. And that we will continue to be a part of that conversation and not excluded.”


    But Brooks noted that the Fed officials did not discuss how monetary policy and the Fed’s adjustment of interest rates disproportionately affects low-income workers and communities of color.


    For the Fed Up campaign, the exclusion of monetary policy reaffirms that nothing short of a meeting between Harker and activists will suffice.


    “We appreciate and accept the invitation to discuss community development and research, but this is not a substitute for the promise President Harker made to Fed Up,” said Shawn Sebastian, a policy advocate and staff attorney for the Fed Up campaign. “President Harker promised to speak with working families in the black neighborhoods of Philadelphia about their experiences -- where unemployment is double white unemployment. Harker promised to discuss how his monetary policy decisions can build a true full employment economy that works for everyone.”


    Philadelphia Fed spokeswoman Marilyn Wimp, in an email to HuffPost, didn't address a question about whether Harker reneged on his promise to meet with protesters. She instead pointed to Tuesday's briefing as evidence of Harker's interest in reaching out to diverse parts of the community.  


    But the list of the Tuesday briefing’s attendees reveals that Brooks was the only stakeholder from a group with a position on Fed interest rates.


    Crafting monetary policy is a main responsibility of the Federal Reserve regional banks. Regional Fed presidents occupy five of the 12 seats on the Federal Open Market Committee, responsible for adjusting the Fed’s benchmark interest rates. Lately, they have accounted for half of the committee’s votes, because the Senate has failed to approve presidential nominees for two of the seven seats reserved for members of the Federal Reserve Board of Governors in Washington.


    The FOMC keeps its benchmark interest rates low when it is more concerned about full employment, and raises them to curb excessive inflation when the economy has grown enough to drive up prices.


    Fed Up wants the central bank to maintain current low interest rates for the near term, which will allow economic demand to continue to grow, benefitting workers with more jobs and higher wages. The campaign applauded the Fed’s decision to leave rates unchanged in September.


    But Fed Up leaders said they're worried about the Philadelphia Fed and the role its president may play in future monetary policy decisions. The Philadelphia region's previous Fed president, Charles Plosser, who left the post in March, was an outspoken inflation hawk.


    Harker, who will serve a one-year term on the FOMC in 2017, was a member of the Philadelphia Fed board’s search committee for a new president, recusing himself once he became a candidate.


    Harker’s views on monetary policy are not yet known. He is a former trustee of the Goldman Sachs Trust, which Sebastian and other Fed Up critics said they worry will make him more sympathetic to financial institutions' concerns about inflation.



    -- This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.











    ]]>
    http://so-l.ru/news/y/2015_10_08_business_on_huffingtonpos_progressive_act Thu, 08 Oct 2015 14:30:15 +0300
    <![CDATA[Fed Watch: The Right And Wrong Arguments For September]]> Tim Duy:

    This September meeting is the gift that keeps on giving. Right now it is giving by the shear quantity of truly bad commentary arguing for a rate hike next month.
    Let's back up a few weeks. Prior to the recent market rout, September looked like a pretty good bet. And the basic story that justified that view still holds. It isn't complicated. Just a straight forward Phillips curve story. The economy continues to improve, dragging the labor market along for the ride. Any questions about the meaning of a weak first quarter GDP report were wiped away by the second quarter. Neither is by itself meaningful; the average of 2.5 percent growth for the first half is just about the same as 2014 as a whole. As the labor market approaches full employment, policymakers expect that wage growth will accelerate and they must raise interest rates to prevent those wage gains from translating into above-target inflation. They feel they need to raise rates sooner than later to be ahead of the curve.
    That story is not without holes, of course. The lack of widespread faster wage growth or inflationary pressures as the unemployment rate approached the Fed's estimate of full employment should be a red flag. Moreover, measures of labor underutilization remain elevated. Marked-based inflation expectations were low and falling, the dollar was rising, and commodities were tanking. And it seems that the risks of premature exit from ZIRP still outweigh the risk of holding on just a little too long. The Fed staff highlighted this risk in the July FOMC meeting. From the minutes:
    The risks to the forecast for real GDP and inflation were seen as tilted to the downside, reflecting the staff's assessment that neither monetary nor fiscal policy was well positioned to help the economy withstand substantial adverse shocks.
    Despite these questions, Fed policymakers were leaning toward a rate hike in September, at least in my opinion. Fundamentally, they want to start raising rates and had shifted toward looking for reasons to do exactly that. It was never, however, a done deal, at least according to the probabilities assigned by the Fed futures markets. I was fairly confident of a September rate hike, but arguments against were entirely reasonable. I still believe that the Phillips curve story justifies expecting a rate hike in September.
    Then I go on a little vacation to visit an old friend, the market starts sliding, culminating is a white-knuckle thousand point drop on the Monday opening. I saw that and came to the same conclusion as fed futures markets. A rate hike probably wasn't happening. That kind of volatility cannot be ignored, and it put the exclamation point on signs that US financial conditions tightened with the end of QE3. We have been around this block before. We know how the story ends.
    As a long time Septemberist (Junist, back in the day), I was not pleased. 
    Many others are not pleased as well, and the commentariat is bringing forth a host of bad reasons to push the Fed into hiking rates in September. One of my favorites comes from Jon Hilsenrath of the Wall Street Journal, reporting from Jackson Hole:
    Raising rates would signal that the Fed is confident about the U.S. economy, Bank of Japan Governor Haruhiko Kuroda said Wednesday in New York, ahead of the Fed gathering. “That is not only good for the U.S. economy, but also for the world economy, including the Japanese economy,” he said.
    Really, the Fed needs to be taking advice from the Bank of Japan? I think you should listen to their advice and do exactly the opposite. Rushing to hike rates never did them any favors. Foreign central banks have anything but the Fed's best interest in mind. Hilsenrath knows this:
    When interest rates rise in one country but not another, the currency tends to strengthen in the country where rates go up, because the higher rates offer greater returns on bank deposits and fixed-income investments.
    Looser conditions abroad require looser conditions in the US, all else equal, to hold the US economy steady. Foreign central bankers, however, are looking to boost growth off of weaker currencies, and hope the Fed thinks they should just eat the consequences for the US economy. Not. Gonna. Happen.
    Another anecdote from Hilsenrath:
    “If you delay something that you were planning to do, then you leave the impression that your compass is different than what you led markets to believe,” Jacob Frenkel, chairman of J.P. Morgan Chase International and former head of the Bank of Israel, said in an interview Thursday. Market drama is increased by delay, he added.
    No, markets know exactly what the compass is. That's why futures markets reacted so quickly Monday. Because those traders read the FOMC statements:
    This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.
    Monday went well beyond typical volatility. The Fed could justify hiking rates if stocks were moving sideways. Or even drifting downward slowly. But Monday? Monday was something different, something that pointed to some significant fragilities in financial markets. And if you think those fragilities will lessen by higher rates, well that's just delusional.
    From the New York Times we get this:
    Lim Say Boon, the chief investment officer for DBS Bank in Singapore, questioned any optimism over maintaining interest rates at their current low level.
    “If markets are unhappy about a September rate hike, would they be happy with a December hike?” he wrote in an analyst note on Thursday. “I am not sure what ‘victory’ would look like for those in the market who are ‘rioting’ against a rate hike in September. There is also a risk of the Fed being seen as hostage to an angry mob in the market — cowed because the mob is smashing up the ‘furniture.’ ”
    The precedent was the taper. Former Federal Reserve Chairman balked at tapering in September 2013, let markets digest the policy change, and then moved forward in December 2013. No problem. The stuff about "hostage to an angry" mob is code for "my trade is going sideways and I need someone to blame."
    Former Philadelphia Federal Reserve President Charles Plosser offers no surprises in these comments:
    “I think the Fed needs to be careful and not overreact to short-term events,” Mr. Plosser said. The Fed’s policy committee “should keep the focus on the longer term.”
    I would say that Monday shocked the Fed into looking at the longer term, such as the deterioration in inflation expectations, long a favored indicator that fell out of favor  because it became inconvenient:

    Break

    More Plosser:
    “The less the Fed says about [the selloff] the better, because it creates the impression that monetary policy is responsible for markets, which it’s not,” he said.
    Actually, the Fed is responsible for maintaining financial conditions conducive to maximum sustainable growth so, yes, monetary policy is responsible for financial markets. And those markets are how the Fed transmits policy no less. So the Fed can't just say "it's not our problem" because it kind of is their problem.
    Stephanie Rhule at Bloomberg uses the Fed's flagging commitment to September to pull out a oldie but goodie:
    The Federal Reserve has had many opportunities to raise rates over the last several years and—whether it was because of too many snowstorms, too few jobs, or not enough consumers hitting the malls—the Fed didn't raise. Why? Because it didn't have to. When the unemployment rate dropped to 7 percent in 2013 and 6.5 percent in 2014, many said this was enough cause to finally raise rates off the extraordinary zero bound. The Fed kept moving the goalposts and said: not just yet.
    ...For those feverishly predicting September vs. December, in terms of timing, you can scratch that concern off the list. The timing on everyone's mind is simply the fear of an additional major market fall. Wouldn't it be great if the Fed had raised rates two years ago, so it would have room to cut in the event that the economy follows the markets into a recession? Now it can't hike because the markets are a mess, and it can't cut because we are already at zero.
    Really, everything would be better now if the Fed had been hiking two years ago when unemployment was 6.5%?  We needed to choke off growth in 2013? Markets could barely swallow the taper by the end of 2013. In what world does anyone think the economy could have handled any level of rate hikes then that would have provided a realistic cushion now?
    Rex Nutting at Market Watch uses the week's events to moralize on the "Greenspan put":
    ...This “Greenspan put” means investing in the stock market is a one-way bet...
    ...I believe the market selloff has made a September rate hike even more compelling than it was before, because it gives Fed Chair Janet Yellen the opportunity she needs to kill the “Greenspan put” once and for all...
    ...if supposedly risky investments like corporate equities and bonds are actually guaranteed by the Fed’s “Greenspan put,” then investors aren’t embracing risk at all...
    Hmmm...I know plenty of people who don't think that investing in stock markets is a one-way bet. Like all those WorldCom investors. Or more generally anyone caught up in 2000. Or 2008. And apparently Millenials don't trust stocks, so they didn't get the message about the "Greenspan put." So let's end this now: Way too many people have lost way too much money for this supposed "Greenspan put" to be a real thing. It is more code for "my trade is going sideways and I need someone to blame."
    Nutting extends his moralizing to Fed officials:
    ...Officials have been obliquely warning that some stock market valuations are too high to be justified by fundamentals. In truth, the correction in the U.S. markets has been welcomed at the Marriner Eccles Building. The Fed doesn’t mind the dip in the Dow, because it punishes complacency and because the selloff has been relatively orderly. There’s been no panic on Wall Street...
    I don't think a guy like Vice Chair Stanley Fisher is sitting around thinking that he needs to take a chunk out of everyone's 401k just to teach them a lesson. OK, so maybe Kansas City Federal Reserve President Esther George is thinking that, but that would be a minority position. 
    Hey, it's been a hard couple of weeks. Things changed. That certain rate hike became alot less certain. Maybe that changes back by September 17. Maybe not. All of us Fed watchers probably won't come to agreement until September 16. Getting emotional and moralizing about change isn't going to stop it. I have learned through the years to heed the advice of a fictional financier:
    Stocks dropped sharply. It is a clear sign, on top of other signs, that financial conditions are tightening ahead of the Fed, and arguably too much ahead of the Fed. If the Fed heeds that warning you have to remember that's their job. Smoothly functioning financial markets. Lender of last resort. All that stuff. Maybe things work out just fine if they don't heed that warning. I am not interested in taking that risk. Not enough upside for me.
    But if they take that risk, it won't be because they want to send the markets a message that they are in charge, or that the "Greenspan put" needs to be put to rest, or that they can't been seen as cowering to the markets, or that they need to stay the course because they already signaled a rate hike, or because foreign central bankers are demanding the Fed hike rates, or because they need to build ammo for the next crisis, or any other reason that comes from barstool moralizing after one too many. If they hike rates it will be for one simple reason: The recent market turmoil does little to shake their faith in the Phillips Curve. That would be the heart of their argument. And if you are arguing for September, that should be the heart of your argument as well.
    ]]>
    http://so-l.ru/news/y/2015_08_28_fed_watch_the_right_and_wrong_arguments Fri, 28 Aug 2015 09:17:06 +0300
    <![CDATA[Noted for Your Afternoon Procrastination for August 12, 2015]]>

    Screenshot 10 3 14 6 17 PM

    Must- and Should-Reads:

    Over at Equitable Growth--The Equitablog

    Plus:

    And Over Here:

    Might Like to Be Aware of:

    Up and down left and right Crooked Timber

    ]]>
    http://so-l.ru/news/y/2015_08_13_noted_for_your_afternoon_procrastination Thu, 13 Aug 2015 00:05:07 +0300
    <![CDATA[Worst Forecaster at the Fed]]> Brad DeLong:

    Worst Fed Forecaster: It is quite an accomplishment to both be (a) the worst economic forecaster among your peers, and yet (b) engage in no public reflection and discussion of how and why you got the past wrong, and how you are changing your model of the economy in order to get it less wrong when you forecast in the future.
    Charles Plosser has managed that accomplishment.
    Those close to him in the WSJ rankings of Fed forecasting success--Bullard, Lacker, Kocherlakota, Williams, and Bernanke--have all discussed, sometimes at great length, what they got wrong, why they think they got it wrong, and what they think they have learned. Not Charles Plosser--at least, nowhere that I have seen. I have not even found any recognition by Charles Plosser that every single year he was President of the Federal Reserve Bank of Philadelphia he did get it wrong, did misjudge the economy, and was recommending monetary policies that would be unduly and inappropriately restrictive. None.
    ]]>
    http://so-l.ru/news/y/2015_08_12_worst_forecaster_at_the_fed Wed, 12 Aug 2015 10:11:24 +0300
    <![CDATA[Без заголовка]]>

    Ranking Fed Forecasters The Wall Street Journal WSJ com

    Live from Bullwinkle Plaza: It is quite an accomplishment to both be (a) the worst economic forecaster among your peers, and yet (b) engage in no public reflection and discussion of how and why you got the past wrong, and how you are changing your model of the economy in order to get it less wrong when you forecast in the future.

    Charles Plosser has managed that accomplishment.

    Those close to him in the WSJ rankings of Fed forecasting success--Bullard, Lacker, Kocherlakota, Williams, and Bernanke--have all discussed, sometimes at great length, what they got wrong, why they think they got it wrong, and what they think they have learned. Not Charles Plosser--at least, nowhere that I have seen. I have not even found any recognition by Charles Plosser that every single year he was President of the Federal Reserve Bank of Philadelphia he did get it wrong, did misjudge the economy, and was recommending monetary policies that would be unduly and inappropriately restrictive. None.

    And so the honorable and intelligent Duncan Black descends further into insanity:

    Duncan Black: "If It's A Day Ending in 'Y' Charles Plosser wants the Fed to raise interest rates.

    And earlier this year.

    And last year.

    And earlier last year.

    And earlier.

    ]]>
    http://so-l.ru/news/y/2015_08_11_brad_delong_s_grasping_re_live_from_b Tue, 11 Aug 2015 23:46:30 +0300
    <![CDATA[Links for the Week of August 10, 2015]]>

    Sanzio 01 The School of Athens Wikipedia the free encyclopedia

    Links:


    ]]>
    http://so-l.ru/news/y/2015_08_10_links_for_the_week_of_august_10_2015 Mon, 10 Aug 2015 15:44:17 +0300
    <![CDATA[Some of the Fed’s Dots Will Be More Equal Than Others]]>
    Federal Reserve Chairwoman Janet Yellen herself has cautioned not to read too much into dot-plot projections and their movements. “I think that one should not look to the dot plot, so to speak, as the primary way in which the [Fed] wants to or is speaking about policy to the public at large,” she said in March 2014.
    BRENDAN SMIALOWSKI/AFP/GETTY IMAGES

    Federal Reserve-watchers on Wednesday will dissect policy makers’ latest economic projections for clues to the path of interest rates in the coming months and years. But divining meaning from the “dot plot” of interest-rate estimates can be difficult.

    One complication, among many: Two sets of projections were submitted by interim policy makers —D. Blake Prichard and Helen E. Holcomb— from regional reserve banks where the presidency is vacant, according to bank spokespeople. Mr. Prichard is the Philadelphia Fed’s acting president; Patrick Harker is expected to take office July 1 and succeed the retired Charles Plosser. Ms. Holcomb is the Dallas Fed’s interim president as the search continues for a successor to Richard Fisher, who also retired this spring.

    Both Mr. Prichard and Ms. Holcomb also submitted projections ahead of the March Fed meeting, when a downward shift in the dots implied officials saw a more gradual path of rate increases in the coming years.

    The dot plot from March 18. Each shaded circle shows the outlook (rounded to the nearest 1/8 percentage point) of a particular Fed official.
    FEDERAL RESERVE

    Did that represent a genuine change in policy makers’ opinions, or could it have partly reflected the retirements of Mr. Plosser and Mr. Fisher? Both men were skeptics of the Fed’s easy-money policies and had signaled support for early rate increases.

    Chairwoman Janet Yellen signaled that the shift in rate projections reflected actual changes in the Fed’s economic outlook. “Certainly there are changes in the assessments of the economy and forecasts for the economy that would point in the direction of downward adjustment in the funds rate path,” she told reporters on March 18. Still, the dots aren’t labeled, so there’s no way to track an official’s projections over time or distinguish, say, Ms. Yellen’s prediction from anyone else’s guess about where the benchmark federal funds rate will land in the coming years.

    Economists have warned the chart should be taken with a grain of salt. No less an authority than Ms. Yellen has cautioned not to read too much into the dots and their movements. “I think that one should not look to the dot plot, so to speak, as the primary way in which the [Fed] wants to or is speaking about policy to the public at large,” Ms. Yellen said in March 2014.

    But that won’t stop Fed-watchers from scrutinizing the dots for clues, just as they pore over slight shifts in the policy statement and the precise wording of meeting minutes and other documents. “Whether the [Federal Open Market] Committee likes it or not, there is no way the 2015 dots won’t send a message about liftoff,” J.P. Morgan Chase economist Michael Feroli said in a recent note to clients.

    Related reading:

    5 Things to Watch at This Week’s Fed Meeting

    When Will the Fed Raise Interest Rates? A Chat With WSJ’s Jon Hilsenrath

    Fed Hones Tricky Message as It Nears Boosting Rates

    Fed’s Fisher Says Raising Rates Soon Will Allow for More Gradual Path

    Fed’s Plosser: Getting Hard to Justify Not Raising Rates

    Deciphering the Fed: ‘Solid’ Beats ‘Moderate,’ and ‘Strong’ is Even Better

    N.Y. Fed: Central Bank Dot Plots Show Fragmented View of Interest Rate Outlook

    Economists: Take Fed ‘Dot Plots’ With a Big Grain Of Salt

    ]]>
    http://so-l.ru/news/y/2015_06_17_some_of_the_fed_s_dots_will_be_more_equa Wed, 17 Jun 2015 13:00:19 +0300
    <![CDATA[The Fed’s Three-Meeting Ceasefire May Soon End]]>
    Richmond Federal Reserve Bank President Jeffrey Lacker could dissent if the Fed doesn’t raise rates next week.
    KEVIN LAMARQUE/REUTERS

    The Federal Reserve’s longest period of public harmony in four years could come to an end next week.

    The last three statements from the policy-setting Federal Open Market Committee–issued on Jan. 28, March 18 and April 29–all were unanimous. The Fed hadn’t gone more than two meetings in a row without a dissenting vote since the first four meetings of 2011, according to a tally by Wrightson ICAP.

    That’s not to say Fed officials were deeply divided last December and closed ranks in January. It’s more a quirk of the calendar. All Fed governors and regional bank presidents participate in the FOMC’s closed-door discussions. But four of the voting seats rotate among 11 regional reserve bank presidents, with permanent votes for the New York Fed’s president and the five Washington-based Fed governors. (Two additional seats on the Board of Governors are vacant.)

    The Fed tends to operate by consensus with the chair, but dissenting votes offer an opportunity for officials to signal displeasure. Almost all dissents over the last two decades have come from regional presidents rather than governors, according to a St. Louis Fed analysis, and such dissents became more common during and after the financial crisis as the Fed launched aggressive efforts to stimulate the U.S. economy.

    The voting slate in 2014 included three frequent dissenters: Minneapolis Fed President Narayana Kocherlakota, now-retired Dallas Fed President Richard Fisher and also-since-retired Philadelphia Fed President Charles Plosser. All three dissented at various points last year; in December, all three dissented at once.

    The 2015 voting crew, on the other hand, has seemed more willing to vote with Chairwoman Janet Yellen. Atlanta Fed President Dennis Lockhart and San Francisco Fed President John Williams have never dissented, according to Wrightson, and Chicago Fed President Charles Evans has only dissented a couple of times since taking office in September 2007. Richmond Fed President Jeffrey Lacker dissented at every meeting in 2012 but has gone with the majority so far this year.

    But the last three meetings may prove to be the calm before the storm, and Ms. Yellen might not find consensus easy to maintain as the Fed faces critical decisions in the coming months. The policy statement due out June 17, at the close of next week’s two-day meeting, could mark the end of the ceasefire.

    The Fed this spring opened the door to an increase in the benchmark federal funds rate from the near-zero level where it has been pinned since the end of 2008. A recent stretch of weak economic data has reduced the odds of a June rate increase, but it remains a possibility.

    Mr. Lacker could dissent if the Fed doesn’t raise rates next week. He said last month he hadn’t decided if he’d vote for a rate increase at the upcoming meeting, but he previously signaled he favored a move at the June meeting.

    “I expect that, unless incoming economic reports diverge substantially from projections, the case for raising rates will remain strong at the June meeting,” Mr. Lacker said in April.

    Mr. Evans, on the other hand, could dissent if the Fed does raise rates. He said last week he doesn’t think the Fed should act until 2016.

    “The hurdle is pretty high for raising rates at the moment,” Mr. Evans said.

    Related reading:

    Fed’s Jeffrey Lacker Has a Kumbaya Moment

    Fed’s Policy-Setters Likely to Be More United

    Fed Gets Rare Hat Trick of Dissent

    Fed’s Axis of Opposition Shifts from Hawks to Doves

    Even if Fed’s Fisher and Plosser Dissent Again, They Won’t Catch Up To Henry Wallich

    Test for Federal Reserve’s Next Chief: Quelling Dissent

    ]]>
    http://so-l.ru/news/y/2015_06_09_the_fed_s_three_meeting_ceasefire_may_so Tue, 09 Jun 2015 17:52:36 +0300
    <![CDATA[Departing Minneapolis Fed Boss to Join Faculty at University of Rochester]]> The departing leader of the Federal Reserve Bank of Minneapolis has a new job lined up.

    Minneapolis Fed President Narayana Kocherlakota, who was to leave his bank at the end of his term on Feb. 29, 2016, will join the faculty of the University of Rochester, his bank said Monday. He will become the first ever Lionel W. McKenzie Professor of Economics on Jan. 1, 2016. Mr. Kocherlakota’s last day at the bank will now be on Dec. 31, 2015.

    Narayana Kocherlakota, president and chief executive officer of the Federal Reserve Bank of Minneapolis, last year near Jackson, Wyo.
    JOHN LOCHER/ASSOCIATED PRESS

    In a statement, Mr. Kocherlakota said the University of Rochester, located in upstate New York near Lake Ontario, “has a long, rich academic history with eight Nobel Prize winners among its faculty and alumni, and I am excited to become a member of such a distinguished institution.”

    Mr. Kocherlakota declined to answer questions about his new position. The Fed is meeting next week to deliberate on monetary policy and is currently in a period where officials refrain from public comment.

    Mr. Kocherlakota will join the school’s economics department. The university’s Simon School of Business, a graduate school, was led by now-retired Philadelphia Fed chief Charles Plosser between 1993 and 2003.

    Gloria Culver, dean of the University of Rochester School of Arts and Sciences, heralded Mr. Kocherlakota’s appointment, saying in a press release “the scholarly work he does here will have great impact for the university and the academic world.”

    Mr. Kocherlakota’s exit from the Fed, announced last December, was a surprise given the long tenure of most regional Fed bank leaders. The Fed currently now has three key vacancies: two Washington-based governor slots are empty, and the Dallas Fed has not yet replaced Richard Fisher, who retired in March. Patrick Harker, currently president of the University of Delaware, takes control of the Philadelphia Fed on July 1.

    Mr. Kocherlakota’s return to academia is a homecoming of sorts. After earning a Ph.D. in economics from the University of Chicago in 1987, he has spent most of his life in an educational setting, teaching at Northwestern University, the University of Iowa, Stanford University and the University of Minnesota, where he was chairman of the economics department from 2006 until 2008.

    Mr. Kocherlakota will exit the Fed as one of its most prominent supporters of maintaining an ultra easy-money policy stance, having started his Fed career in 2009 as someone increasingly ready to raise interest rates. For some time now, Mr. Kocherlakota has argued the Fed must maintain its near-zero short-term interest rate policy as a way to get persistently low levels of inflation back to the central bank’s official 2% target.

    As the Fed has moved toward raising rates, something many key officials believe will happen this year, Mr. Kocherlakota has beseeched his colleagues to hold their fire. The official’s dovish stance has found him at odds with his colleagues in many instances. His final stint as a voting member of the monetary-policy setting Federal Open Market Committee last year saw him dissent three times.

    Mr. Kocherlakota’s time at the Minneapolis Fed has also seen turbulence and unusually public friction with some of the bank’s economic staff.

    Related reading:

    Kocherlakota: ‘Mistake’ for Fed to Raise Rates in 2015

    Fed’s Kocherlakota Worried Too-Low Inflation Could Persist for Years

    Minneapolis Fed’s Kocherlakota: Fed Shouldn’t Raise Rates in 2015

    ]]>
    http://so-l.ru/news/y/2015_06_08_departing_minneapolis_fed_boss_to_join_f Mon, 08 Jun 2015 19:56:56 +0300